Buying right: procurement principles, thresholds and procedures

1The principles

Humanitarian procurement spends the money of donors and contributors on behalf of the people being assisted. It rests on principles shared by most organisations:

• Best value for money: not necessarily the lowest price, but the best combination of quality, lead time, total cost and sustainability.
• Competition that is effective and proportionate to the value.
• Transparency and fairness: the same information and the same rules for all suppliers.
• Segregation of duties: the person who requests is not the person who chooses alone, nor the person who receives alone.
• No conflict of interest: written declaration by the members of the procurement committee.
• Ethics and compliance: no sanctioned suppliers, no child labour, compliance with donor rules.
• Traceability: every decision is documented in a file that an auditor can understand on their own.

2Thresholds and procedures

Each organisation sets thresholds that determine the procedure. A common scale (amounts vary between organisations and donors, who sometimes impose stricter thresholds):

The threshold applies to the total value of the need, not to each order: 5 orders of 9,000 USD for the same need make up a purchase of 45,000 USD (splitting is prohibited).

Controlled exceptions: single source (sole supplier justified on technical grounds), emergency procedures triggered by management for a limited period, purchases through an existing framework agreement. Each exception is justified in writing and approved at the right level.

3The procurement file

The procurement file follows the purchase from start to finish. Minimum content:

• Signed purchase request, with specifications, quantities, budget line and project code.
• Budget check by finance.
• Competition documents: request for quotation or tender dossier, list of suppliers consulted, proof of dispatch or publication.
• Offers received, including those rejected, and the bid opening record.
• Comparative table and evaluation report, signed by the committee, with the declarations of no conflict of interest.
• Checks on the selected supplier: sanctions lists, legal registration.
• Purchase order or contract, signed according to the delegation of authority table.
• Delivery note and goods received note (quantity and quality), invoice, proof of payment.

An incomplete file is the most frequent cause of costs declared ineligible in an audit, even when the purchase was honest.

4Writing specifications

Good specifications describe the need in a precise, measurable and neutral way:

• Functional: what the item must do (filter 20 litres per day, withstand 3 rainy seasons).
• Technical: dimensions, materials, standards (for example the standard specification catalogues of the major organisations, ISO standards, the WHO essential medicines lists).
• Packaging and marking: weight per package, palletisation, labelling in the local language.
• Delivery: place, date, Incoterm, documents.

Common pitfalls: naming a brand (which excludes competition; add "or equivalent"), specifications that are too vague (offers impossible to compare), or too strict without reason (only one possible supplier). Specifications are drawn up with the programme team and, for technical items, with a specialist (health, water, shelter).

5Criteria and evaluation grid

Criteria are set before offers are received and announced to suppliers. Two methods:

• Lowest-priced compliant offer: administrative and technical compliance is checked (yes or no), then the lowest price among compliant offers is selected. Simple, suited to standard items.
• Weighted scoring: technical and financial criteria with weights. Suited to services, works and complex items.

Weighted scoring example (technical 60%, price 40%). Financial score = lowest price / price of the offer × 40.

C is the cheapest but is eliminated by the announced technical threshold; the lowest price among the retained offers is therefore 80,000. B wins narrowly thanks to its technical quality. A committee cannot change the criteria or weights after the offers have been opened.

6Ethics, conflicts of interest and suppliers

Procurement is the area with the highest fraud risk. The basic rules:

• Every committee member declares in writing that they have no link with the suppliers; if there is a link, they withdraw.
• No gift, meal or benefit is accepted from a supplier, even after the award.
• Offers are received in sealed envelopes or in a secure electronic mailbox and opened in a session, in front of at least two people.
• Unsuccessful suppliers may ask for the reasons; a complaints mechanism is provided.
• Suppliers are screened against sanctions lists (United Nations, donors) and internal exclusion lists.

A good supplier roster (a qualified database, with performance evaluations after each contract) speeds up procurement and reduces risk. Local procurement, when the quality is there, also supports the local economy and localisation.